You can easily find yourself lacking working capital, which is one of the biggest contributing factors to the failure of one in six SMEs.

Here’s how to prepare your business for the opportunities and challenges associated with rapid growth.

Take more care with credit policies

For any new orders, make certain your customer completes a credit application and that they understand your terms of trade. Furthermore, ensure your terms of trade retain ownership of any goods until such time as the invoice is paid in full.

Encourage your customers to clear payments by emailing or posting invoices quickly and giving clients a clear time frame to pay.

Revisit your terms of trade and make any necessary changes if need be.

Contact your customer a few days before the invoice is due and politely request them to confirm that the payment is included in the payment run.

Unlock the capital in your business

Invoice discounting is a form of debtor finance which can inject working capital into your business fast, by advancing up to 80% of what you are owed by customers in 24 hours.

You then use those funds to buy more stock, pay wages etc. In 30 days, when your customer pays, the Invoice Finance provider receives the payment, and transfers you the remaining 20%, less fees.

Unlike traditional debtor finance and factoring, it is a funding-only facility and you retain control and management of your debtor ledger. It is ideally suited for businesses with good credit control.

With TIM Finance, you can handpick which invoices you want to sell, without having to factor your entire debtor book.

Invest in your founding staff members

As your company grows your competitors will start trying to lure your most talented employees away with promises of higher pay and better conditions.

Lack of career opportunities, poor relations with the boss and insufficient pay are key reasons staff choose to leave. Good communication will help to ensure those issues are addressed early on.

Equipment and machinery problems

Growing your business will see you asking whether it’s better to lease or buy your equipment.

Careful consideration should be used to decide what’s best in your circumstances.

When you buy, you’ll end up owning the asset and can dispose of it at any time. You will, however, be responsible for its insurance and maintenance. You will also need to take value depreciation and obsolescence into account.

Will you require a loan to cover the purchase price, and how will this affect available credit?

Compliance with regulations and standards

As your business expands, compliance becomes more of an issue.

Do you have rules in place governing workplace safety, harassment and bullying? If you trade goods with other countries, are you privy to current import and export regulations?

When doing a business risk assessment, try to involve all staff rather than just keeping it within senior management.

This will help encourage risk awareness – and good risk management – throughout your entire business.

If your business needs short term financing, talk to our industry experts today.